A Charge creation is a legal claim created on the assets or property of a company to borrow funds essential for its growth and working
A charge is basically a right which is created by a person or company (borrower) on its assets and properties, whether present or future, in favor of a bank or financial institution (lender) which lends financial assistance. where an immovable property of one person is by act of parties or operation of law made security for the payment of money to another and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property, and all the provisions which apply to a simple mortgage shall, so far as may be, apply to such charge. There are two types of charge:
Fixed Charge: Fixed Charge is defined as a lien or mortgage created over specific and identifiable fixed assets .The charge covers all those assets that are not sold by the company normally. It is created to secure the repayment of the debt.
Floating Charge: The lien or mortgage which is not particular to any asset of the company is known as Floating Charge. The charge is dynamic in nature in which the quantity and value of asset changes periodically.
1. When a charge is created and filed with the Registrar, the Registrar of Companies would issue a certificate of registration of charge to the person in whose favor the charge is created.
2. In case the terms, conditions, extend or operation of a charge created on a company and filed with the Registrar is changed, then the company must file for modification of the charge.
3. As per Companies Act, 2013, non-registration of a charge makes the company and officers of the company liable for fines and punishment. Compliance of charge creation may avoid such fine and punishment.
4. When the charge created on a property or asset of a company is satisfied in fully, the company must give intimation to the Registrar on satisfaction of the charge.
1. Board Resolution passed by the company
2. Hypothecation Agreement provided by the bank
3. Sanction Letter provided by the bank
4. Other documents as per type of charge.
5. Pan and email id of Bank
6. Digital signature of Director
7. Digital signature of Banker
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